Parliamentary Budget Office role; Money Bills Amendment Procedure and Related Matters Act

NCOP Appropriations

17 July 2019
Chairperson: Mr Y Carim (ANC; KwaZulu Natal) & Ms D Mahlangu (ANC; Mpumalanga)
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Meeting Summary

The Money Bills Amendment Procedure and Related Matters Act No 9 of 2009 provides for the establishment of the Parliamentary Budget Office. The PBO briefed the Committee on its core functions:
- Undertaking research and analysis for the Standing and Select Committees on Finance and Appropriations;
- Providing reviews and analysis of documents tabled in Parliament by the executive;
- Providing advice and analysis on proposed amendments to the Fiscal Framework, Division of Revenue Bill and Money Bills and policy proposals with budgetary implications;
- Monitoring and synthesising committee reports tabled in the House with budgetary implications;
- Keeping abreast of policy debates and developments in key expenditure and revenue areas;
- Monitoring and reporting on potential unfunded mandates in legislative, policy and budgetary proposals;
- Undertaking work deemed necessary by PBO Director to support the implementation of Money Bills Act.

Notably, the position of the PBO Director is still vacant.

Members asked about PBO best practices and good governance as required by the Money Bills Amendment Procedure Act; the effective implementation of exercising oversight in its analysis on spending; consultation at grassroot level; consultation with the “alternative world” as opposed to Western countries, more particularly the BRICS countries. Members were interested about the voting process for Money Bills. On the monitoring of spending, it was clarified that this is not a PBO function but the role of the committee researchers. The NCOP committee researchers analyse expenditure in the provinces and municipalities. The Chairperson of the Standing Committee on Finance was vocal about the fact that the Committee currently lacks a committee researcher.

A Parliamentary Senior Legal Advisor briefed the Committee on the Money Bills Amendment Procedure Act which gives effect to Section 77(3) of the Constitution requiring national legislation to provide a procedure to amend money bills before Parliament. The Act came into operation on 16 April 2009. It established the role and mechanisms for Standing Committees on Finance and Appropriations in both Houses to deal with the legislative and other instruments of the budget cycle that came before these four committees. The administration mechanisms of the Act were directed to the Parliamentary Budget Office. Other matters touched on included timeframes; the sequencing in respect of reporting; making amendments; consultation; amendments to revenue; reporting; technical corrections; and the PBO. The norms and standards for provincial legislatures were taken out of the Act as it was unconstitutional to dictate what committees provincial legislatures should have. He noted that the Fifth Parliament decided to leave the appointment of the PBO Director to the Sixth Parliament under the new Advisory Board and amended Money Bills Act.
 

Meeting report

Parliamentary Budget Office on its role
Mr Dumisani Jantjies, PBO Deputy Director: Finance, gave a briefing to a joint meeting of the Select Committees on Finance and Appropriations. He explained that a parliamentary budget office was established by many legislatures which recognized the need for more technical capacity, analysis and advice. PBOs enhance the role of the legislatures to hold governments accountable for budgets and service delivery. A Network of African Parliamentary Budget Offices (AN-PBO) was set up in 2016 and some new PBOs have been established since then.

The RSA PBO core functions were:
- Undertaking research and analysis for the Standing and Select Committees on Finance and Appropriations;
- Providing reviews and analysis of documents tabled in Parliament by the executive;
- Providing advice and analysis on proposed amendments to the Fiscal Framework, Division of Revenue Bill and Money Bills and policy proposals with budgetary implications;
- Monitoring and synthesising committee reports tabled in the House with budgetary implications;
- Keeping abreast of policy debates and developments in key expenditure and revenue areas;
- Monitoring and reporting on potential unfunded mandates in legislative, policy and budgetary proposals;
- Undertaking work deemed necessary by PBO Director to support the implementation of Money Bills Act.

He noted that the position of the PBO Director was vacant [since 1 October 2018].

Other points made in the briefing included:
- PBO was established in line with international best experience while taking into account the South African context;
- Established as a juristic person within Parliament, led by a Director and accountable to Parliament;
- PBO provides independent and objective advice and analysis on fiscal issues to Parliament’s Committees, but does not give recommendations;
- PBO support he four Finance and Appropriations Committees. It is available to other committees but this is subject to its capacity;
- Its  mandate set out in the Money Bills and Related Matters Act 2018;
- PBO provides both regular analysis and demand-driven research and analysis to Committees;
- Due to limited capacity, PBO's workflow system processes requests through a Committee Chairperson, as opposed to individual MPs;
- PBO prioritises Budget and MTBPS (Medium Term Budget Policy Statement)  analysis and related money bills or instruments;

Discussion
Mr F du Toit (FF+; North West) noted that the Act was drafted in terms of best practice and good governance. He wanted to check the effective implementation of the PBO role and its work flow in providing oversight of department accountability and analysis of department over or underspending.   

Mr E Njandu (ANC; Western Cape) noticed that PBO stakeholder engagement was at a high level, more like an ivory tower. He asked if the PBO had a way of consulting at grassroots level such as in rural spaces, instead of focusing on that high level only. Secondly, in its benchmarking exercises, it seemed that the PBO was more Western inclined in looking at multilateral institutions which would easily trap the country into an international financial system based on the practices of the former colonizers. He asked why the PBO was not consulting with the alternative world, particularly the BRICS countries, seeing that the policy perspectives and direction of the country were pursuing that terrain so that we can be able to do business unusual.

Mr D Ryder (DA; Gauteng) welcomed the presentation and said that it was informative and Members were looking forward to working with the PBO.

Ms D Mahlangu (ANC), Chairperson of Select Committee on Appropriations, said that she had started feeling the presence of the PBO only recently. She had been in Parliament since 2014 and it had been under the radar. She expressed delight at it presence.

Mr Jantjies replied about benchmarking, saying that before the establishment of the PBO, there was wide consultation with international stakeholders. However, the engagement was not about stakeholders providing input on what the Office should do but rather experience sharing. The Office exchanges ideas with different parliamentary budget offices, but the Office took pride in contributing to the establishment of the African network. The engagement with international PBOs was more about an idea-and-experience sharing platform.

The Office had not yet engaged with BRICS countries but for the past three years the Office had invited China, South Korea and Brazil to conference meetings. The stakeholder engagement was more at a technical level. He agreed that the Office needed to engage more at a grassroots level. However, the lack of adequate capacity obliterates the ability for grassroots level engagement.

Ms Nelia Orlandi, PBO Deputy Director: Public Policy, added to the point on stakeholder engagement that the PBO is a new phenomenon and there are not a lot of parliamentary budget offices globally which was why the South African PBO started attending the global network. It was missed this year as the Director position is vacant. The main aim of the network is to assist each other with start-up, product and service offerings and share ideas on budget analysis. The other network is the OECD. Those were the only two networks the Office took part in, to see what other PBOs were doing.

On the over and under-expenditure of each department, the PBO does not analyze the expenditure trends of the department. However, if a Portfolio Committee requests the PBO to assist in that exercise it would do so probably with a page or two of budget analysis. The PBO cannot provide that assistance during the budget cycle as its capacity is fully channelled towards the budget cycle.

Dr Seeraj Mohamed, PBO Deputy Director: Economics, replied that the PBO sees its main stakeholders as Members of Parliament, especially Members of the Finance and Appropriation Committees. The main aim was to improve the PBO’s ability to service the Members and the Committees. The external engagement it was involved in was participation in setting up platforms for sharing information within the African region. We also wish to ensure our outputs are at the highest level. In our work, we do not go out and consult different stakeholders and groups about the content we produce. Our stakeholder engagements were not for that purpose but at the benchmark level to improve capacity to ensure that we are operating at international high standards. “Members can guide us on further engagements that they want us to provide”.

As for BRICS countries, none of the BRICS countries have PBOs except for SA. India has a national institute that conducts research autonomously but it is under the Minister of Finance. They visited us last year and we will continue engaging with them. Perhaps when MPs attend the BRICs meeting they can raise the matter of parliamentary budget offices at that level.

Ms Mahlangu pointed out that the NCOP Committees are responsible for oversight in the provinces. She asked how the PBO would assist at that level because she was uncertain about the existence of PBOs in the provinces.

Ms Mahlangu referred to the African Network of PBOs and said that rumour has it that the SA PBO has a role to play in that space. The Accra-Ghana Conference, what role are you going to play and how is it going to be structured? If Co-Chairperson Carrim would attend the Conference, what impact would it have on him or MPs that attend the conference?

Mr Jantjies replied that the PBO has not yet finalised its engagements with the colleagues in Ghana and he was uncertain about the SA PBO’s role and he was not clear on whether it would participate or not.

Mr Jantjies replied that some provinces have been working on establishing their PBOs and Gauteng was most advanced and has recently worked on drafting a Money Bills Act for the province. Eastern Cape and other provinces were still trying to establish their PBOs. The national PBO was not zoomed into the provincial space. We are still trying to shape up our work to cover that space with budget analysis and spending in the provinces.

Mr Phelelani Dlomo, Select Committee on Appropriations Content Advisor, provided clarity on department expenditure analysis. He explained that the monitoring of under- and over-expenditure by the NCOP Select Committee on Appropriations is predominantly done on provinces and municipalities. The National Assembly Committee would monitor under- and over-expenditure at a national level. The monitoring of under- and over-expenditure exercise is performed by the Committee Researcher who looks at the Section 32 reports published by Treasury quarterly. The NA and NCOP Committee Researchers analyse those departments, provincially and nationally, to look at which departments had wide variances and present their analysis information to the Committee. The Committee would then identify areas to focus on and invite those departments that it thinks warrants attention.

The second part of this exercise dictates that the Select Committee must look at municipality expenditure. The Municipal Finance Management Act, in Section 71, states that municipalities publish expenditure reports. Treasury publishes a report on these quarterly. The researcher analyses that report and reports to the Committee after conducting the analysis. However, the purpose around the publication of those reports by Treasury has not been the same and this matter has been raised numerous times. Treasury publishes a two-page report full of figures according to economic cluster but there is no non-financial information that explains the figures and why the expenditures are not moving. In the NA, the Committee intervened and requested the non-financial information. That non-financial information is critical for the Committee to understand the movement on the financial information. There are always dynamics on how the departments spend their budgets per quarter. So in the absence of that non-financial information, it gives an incorrect perspective to the Committee about the particular department. He requested the Co-Chairpersons ensure that they take this matter up as well in the NCOP context.

Mr Y Carrim (ANC), Select Committee on Finance Chairperson, agreed with Mr Dlomo about ensuring that this matter was addressed.

Ms Orlandi said that the reporting of performance information is not in sync with the reporting of the financial information.

Mr Carrim welcomed the point but Mr Dlomo's point was still valid. Members in getting accustomed to Parliament should get a sense of the rules, processes and procedures of Parliament. He suggested that there be a presentation for new Members about the different roles of the Committee support staff.

The Select Committee on Finance has no researcher, and one committee secretary instead of three which is astonishing. He has taken the matter up to the highest level and if by December 2019 that has not happened, the Committee will take a resolution to come to a stand-still. He was willing to negotiate around this but he emphasized the importance of the Select Committee on Finance getting adequate support staff.

On the PBO Advisory Board, Mr Carrim indicated that its role was quite boring and it meets about four to five times a year. However, in deliberations on the new amendments to the Money Bills Amendment Procedure Act, they raised the matter of the need for greater public participation, and more importantly, the onerous timeframes that deter this due to the tight parliamentary calendar. Managing the time frames of processing the tax bills, fiscal framework and appropriation bill is partly related to the programming. With the new budget cycle regime coming in October, the four Chairs will have to sit with the Programming Committee to state what they think can be done about the matter of onerous timeframes.

Co-Chairperson Carrim asked everyone present to honour the passing of Mr Johnny Clegg. He said Mr Clegg deserved such reverence because he was once arrested at the age of 13 for being in a township as a white person. He added to say that in fact, he did more for non-racialism and social building than political activists. He demonstrated his beliefs through his efforts and lifestyle and he believes that government should, one way or the other, honour him.

Money Bills Amendment Procedure and Related Matters Act: briefing
Adv Frank Jenkins, Parliamentary Legal Advisor, stated that he tailored the presentation to focus on the NCOP Select Committees on Finance and Appropriations.
 
Adv Jenkins explained that the Act gives effect to Section 77(3) of the Constitution requiring national legislation to provide a procedure to amend money bills before Parliament. The Act came into operation on 16 April 2009. The review process started in May 2012.

The mechanisms established by the Act were effected both in the NA and NCOP in the form of the Standing Committees on Finance and Appropriations. The Act requires rules for:
- Composition of the committees;
- Election of Chairpersons;
- Functions of the committees in addition to those stipulated in this Act;
- Consultation between the respective committee on finance of each House;
- Consultation between the respective committees on appropriations of each House; and
- Other related matters

The administration mechanisms were directed to the Parliamentary Budget Office, whilst norms and standards to the provincial legislatures. However, norms and standards to provincial legislatures were taken out as they were ruled unconstitutional as they dictated what committees provincial legislatures should have.

Adv Jenkins spoke about the legislative and other instruments regulated by the Act such as the Medium Term Budget Policy Statement (MTBPS) and juxtaposed the roles played by each of the Finance and Appropriations Committees.

Some of the matters he touched on included timeframes; the sequencing in respect of reporting; making amendments; consultation; amendments to revenue; reporting; technical corrections; and the PBO.

In conclusion, he indicated that the previous Parliament decided to leave the appointment of the Director for the PBO to the Sixth Parliament under the new Advisory Board and amended Money Bills Act.

Discussion
Co-Chairperson Mahlangu suggested that, for the new Members, the Committee looked at the technical terms that would most likely be used frequently in committee.

Mr Z Mkiva (ANC; Eastern Cape) suggested that in line with the Fourth Industrial Revolution, Parliament could work on an app where Members could interact with all these matters. He believed that would be transformative. The information is already there, it is just a matter of putting it together in chronological order. He believed that would assist Members a great deal.

Mr Ryder said a lot of information had been presented and it was too much to chew on in one bite. He requested that Members be allowed to digest the information and go through it in conjunction with the Act.

Co-Chairperson Mahlangu suggested that Members use the booklets provided because they contained the definitions for all technical terms Members may need to be familiar with.

Mr Dlomo noted that the research unit had a ‘Budget Analysis’ document which covers the terminologies and definitions. The team could obtain that document and send it through to Members. Secondly, there is a manual which was tailored for the Standing Committee on Appropriations detailing all relevant information that would assist the Members in the cluster. The app would take much longer to implement so in the interim Members could use the available material.

Co-Chairperson Carrim agreed with the suggestions. He said that presentations from the support staff on these matters were still necessary because Members did not always read the documents sent to them. Therefore, a presentation and discussion would assist Members.

Adv Jenkins said he understood the comments as an appeal to distribute information in a digestible form.

Co-Chairperson Mahlangu asked about the requirements for a quorum for passing Money Bills in both Houses and if that was critical.

Mr Lubabalo Nodada, Committee Secretary for Select Committee on Appropriations, commented to Adv Jenkins that he was under the impression that the nine-day timeline for processing the Division of Revenue Amendment Bill had been revised. However, in a government gazette dated 17 January 2019, the nine days remained.

Adv Jenkins clarified that the government gazette contained both the new amendments and the parts of the old Act that were removed. That is how Amendment Acts are published. The NCOP would vote on the fiscal framework and the appropriations bills the same way according to the Section 75 voting procedure, which is the simple majority. On the Division of Revenue Bill and Division of Revenue Amendment Bill are Section 76 bills and voting is done through provincial mandates, per province.

The Chairpersons welcomed all inputs, comments and questions as well as responses. The Committee would deal with the other agenda items at its next meeting.

The meeting was adjourned.

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